Friday,18 August, 2017
Current issue | Issue 1346, (25 - 31 May 2017)
Friday,18 August, 2017
Issue 1346, (25 - 31 May 2017)

Ahram Weekly

China in Africa

The rising sun of China in Africa may be causing the Western sun to set, writes Karim Mansour

China in Africa

In a statement issued by the World Trade Organisation (WTO) recently, an American expert is cited as saying that over the past decade from 2007 to 2016 US exports to Africa have dropped by about five to eight per cent, while during the same interval Chinese exports have soared, surpassing a 300 per cent increase in 2015.

Only a few years before this in 2012, the Abu Dhabi Investment Company published a study prepared by the Economist Intelligence Unit, a branch of the well-known UK magazine, entitled “A Look at Africa: Horizons for Investment up to 2016”. The study reported that numerous investment firms around the world believed that Africa possesses the largest overall incentives for investment of all the world’s emergent markets. Nigeria and Kenya in particular hold the greatest attraction for investment, it said.

Against the backdrop of the competition between Beijing and Washington over commercial partnership with Africa through bilateral trade and investment, which side would be better for Africa? Should the continent choose the US or the Chinese partner? Africa possesses about 12 per cent of the world’s oil reserves, 40 per cent of the world’s gold, and almost 90 peace of its platinum and chrome, according to the UN Economic Commission for Africa.

Chinese-African relations date back to 1956, when Egypt established diplomatic relations with Beijing. Other African countries soon followed suit, and today 50 out of Africa’s 54 states have diplomatic relations with China. Following the creation of the Chinese-African Cooperation Forum in 2000, the volume of African-Chinese trade rose to $166.3 billion by 2011. That figure is astounding in comparison to the early 1950s, when the volume stood at only $12 million. By 2016, Beijing had emerged as Africa’s largest trading partner, surpassing the US and France by a small margin.

The Chinese have been aware of the Africans’ generally low purchasing power, and they have adopted a trade and marketing strategy based on offering Chinese goods at cheap prices. This strategy has undoubtedly worked, and the invasion of Chinese products into African markets has led major Western firms to complain that they are unable to compete. The prevailing impression now is that the rising sun of China in Africa is causing the Western sun to set.

A number of reports have demonstrated that further economic cooperation between the African countries and China might offer the solution to these countries’ long accumulating trade deficits with their European partners. Not long ago, China began to rapidly intensify its investment in Sub-Saharan African, and by 2013 it had become the foremost investor in the continent.

Nevertheless, some African economic experts have voiced reservations over the Chinese-African relationship. They have expressed concerns that the Chinese may be “new colonisers” and have noted that Beijing has also begun to enhance its soft power on the continent by opening Confucius Institutes to disseminate the Chinese language and culture. China has also been offering material incentives, such as loans for infrastructure development, in a bid to win the hearts and minds of the African peoples.

Chinese President Xi Jinping recently unveiled a new Chinese foreign policy approach under the banner of the “Chinese Dream”, which, he said, was meant to realise economic prosperity, cooperation, development, mutual interests and peace. Through its “Chinese Dream” policy, Beijing hopes to increase its popularity as a reliable partner in the realisation of joint progress and development.

Another complaint lodged against China in Africa concerns the environmental pollution caused by Chinese projects in Mozambique, South Sudan and Equatorial Guinea. In South Sudan, protesters killed the head of a Chinese team that was drilling for oil in the country, accusing the Chinese of contaminating the soil. Chinese workers have also been killed in Ethiopia and Equatorial Guinea. In Nigeria, rebels have warned Chinese companies against approaching the oil-rich Niger Delta.

Between 2009 and 2012, China offered some $10 billion in facilitated loans to Africa. During his visit to Africa in March 2013, President Xi Jinping increased the figure to $20 billion for the period from 2013 to 2015. By 2025, the total amount of Chinese direct investment, facilitated loans and commercial loans to Africa is expected to reach $1 trillion.


China in Africa

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ECONOMIC AID: African economists have observed that Beijing does not try to use its economic aid as a means to influence or dictate certain conditions on the domestic policies of African countries.

But on the other hand, China does not help Africa for free. Chinese projects are aimed at exploiting the natural resources on the continent and its local markets and to open up vast opportunities for Chinese firms as well as employment opportunities for Chinese workers. According to World Bank figures, about a third of China’s energy needs now come from Sub-Saharan African countries. China’s energy consumption has skyrocketed over the past decade. More than 2,200 Chinese companies are currently working in African countries south of the Sahara. Most of these are private firms.

Some observers maintain that Africa’s economic relationship with China will continue to thrive because it alleviates the economic pressures that some Western nations still exert on many Africa countries in order to propel them toward democracy. At the second summit meeting of the Chinese-African Cooperation Forum held recently in Johannesburg, South Africa, China and the African nations agreed to elevate their relationship to the level of a comprehensive strategic cooperation partnership.

China announced that it had devised 10 grand plans for Chinese-African cooperation designed to help Africa accelerate its industrialisation, agricultural modernisation and infrastructure development. China also pledged $60 billion in financial assistance to the African nations, of which $10 billion would be allocated to the Chinese-African Cooperation Fund for the development of production capacities.

The Chinese government has also designed around 900 projects to assist the African countries in agriculture, healthcare, education and other fields, and it has offered occupational training to more than 30,000 people since 2013.

In this regard, Zhang Wei, the president of the China Council for the Promotion of International Trade, has said that along with the rapid growth in trade relations between China and Africa, investment relations between the two sides have also been flourishing. Chinese companies invested $3.2 billion in Africa in 2016, he said. Last year, Chinese firms concluded contracts for new projects in Africa worth a total of $82 billion, up eight per cent from the previous year, making Africa the second largest market for Chinese firms in terms of contracts outside China.

With regard to the US, the first contact between Africa and the US occurred when the early American colonists needed slaves in order to develop the wealth of their new country. The first “shipment” of enslaved Africans reached American shores in the early 17th century. Although the US only “imported” six per cent of the total number of enslaved Africans that were sold in the Americas during the period in which such slaves were sold, Africans who have been in America for generations now make up more than 65 per cent of the population of the US in some areas.

After the Cold War ended in the early 1990s, the US tried to entice the African countries with economic and other projects. An interview on the subject with an American diplomat in Mali was the subject of a satirical editorial in a Senegalese newspaper at the time, for example. “France is our first wife whom we did not chose out of our own free will,” the newspaper said, referring to French colonial rule in West Africa. “America is our second wife whom we have generally preferred.”

At the beginning of the era of globalisation, Africa became a target of the “trade diplomacy” that Washington now made the centrepiece of its foreign policy. The 11-day African tour undertaken by former US president Bill Clinton in the 1990s was meant to promote the idea of combining democracy and free trade within the framework of what Washington called the “rejuvenation of Africa” after its long neglect by France.

 


President Abdel-Fattah Al-Sisi shakes hands with Chinese President Xi Jinping during his visit to Beijing

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US OPTIMISM: US experts have been highly optimistic about the potential for economic growth in Africa, and five to 10 per cent growth rates have signified a major change from the preceding three decades.

However, the dilemma is that the continent is still very poor. Africa today is home to 12 per cent of the world’s population, but it only accounts for two per cent of global income.

According to a WTO report, the most important US exports to Africa are now tools and equipment, nuclear technology, water heaters and airplanes, followed by electrical and domestic appliances. With regard to China, the major exports are electrical machines and appliances, televisions and domestic electronics, and mechanical tools and equipment, followed by cars and railways.

Many experts believe that one of the reasons the US is more interested in Africa now than it has been before is because it is worried by Chinese commercial expansion on the continent. In fewer than five years, the former Chinese president visited Africa four times and met with numerous African leaders, including some that Western governments have shunned. Part of the American anxiety stems from the fact that China is willing to accept raw materials in payment for goods, an arrangement that suits African realities.

Former US president Barack Obama boasted of US success in expanding the scope of US trade and investment in Africa. US investment at the time had reached $33 billion and was helping to promote development in Africa, he said. On top of this, another $4 billion had been earmarked for US NGOs working in the fields of women’s health, child health, fighting AIDS, inoculation drives and medicines, bringing the total amount of US investment in Africa up to $37 billion.

In addition, there are the energy projects that the US plans for Africa and that are projected to provide electricity to some 60 million homes and projects. Washington also plans to propose a food security initiative that seeks to rescue 15 million people from poverty.

At the same time, the US has recently shown increasing interest in African oil resources on the grounds that it needs to diversify its energy resources and reduce its dependency on Middle Eastern oil.

Experts believe that another reason why the US is interested in African oil is so that it can notch up the pressure on oil-exporting nations to increase their production in order to bring global prices down and to create rifts between the oil-producing countries. Although only 15 per cent of US oil imports come from Africa, mostly from Nigeria, the seventh-largest oil-exporter in the world, Africa’s oil reserves account for only about six per cent of global reserves.

The Chinese and American approaches to partnership with Africa are thus radically different. The former states that give and take and cooperation and shared destiny are the bases of the partnership. For the latter, Africa is a market in which to sell weapons and a region to be kept under control in order to be able to deplete its resources, whether petroleum, mineral or otherwise.

Although the African continent is still gripped by poverty, undernourishment, disease, illiteracy, armed conflicts, and mounting foreign debt, there are promising signs that it can bring about progress for its peoples and a better future for the continent as a whole if resources are used wisely and problems that have hampered the advance towards development and prosperity are resolved.

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